When Nigeria bring out the Nigeria Tax Act (NTA), 2025, policymakers sold it as a bold reset. The new law promised simpler rules, fairer taxation, and stronger government revenue. For many businesses, it sounded like the start of a more predictable tax era.
But as companies dig deeper . The provision are raising red flags about how company income tax (CIT) will work in real life. Instead of clarity, some sections introduce uncertainty that could reshape business decisions, investment plans, and even asset sales.
Tax advisers reviewing the law, including insights highlighted by KPMG, have identified six major areas that could significantly affect how much tax companies pay. Together, these issues expose gaps between the law’s intention and its practical impact on businesses operating in Nigeria. 
One of the most worrying areas involves how the law treats gains from selling business assets. Under Sections 39 and 40 of the NTA, companies calculate taxable gains by subtracting an asset’s tax-written-down value from its sale price. The law makes no allowance for inflation.
In an economy where inflation has eroded the naira’s value over time, this approach can be punishing. A company may sell an asset at a higher price simply because prices have risen, not because the asset truly gained value. Yet the full difference is taxed at the 30 percent CIT rate. In effect, firms may pay tax on paper profits that do not reflect real economic gains.
This rule could push companies to sell assets earlier than planned just to reduce future tax exposure. Tax professionals have suggested introducing cost indexation, which would adjust historical asset values for inflation and produce a fairer outcome.
Foreign exchange costs present another challenge. Section 20(4) of the NTA limits the deductibility of foreign-currency expenses to their naira value at the official Central Bank of Nigeria exchange rate.
For many businesses, especially import-dependent ones, this rule does not reflect reality. Due to limited access to official foreign exchange, companies often source dollars at higher market rates. The difference between what they actually pay and the official rate becomes non-deductible, increasing taxable profits and the CIT owed.
While the provision appears designed to discourage speculative FX behavior, it risks penalizing legitimate business activity. The result is a distorted tax base that does not match actual operating costs.
Another provision shifting risk onto companies involves value-added tax. Section 21(p) disallows expenses where VAT was not charged, even if the expense was genuinely incurred for business purposes.
This creates a compliance trap. If a supplier fails to charge VAT, the purchasing company could lose the right to deduct that expense for CIT purposes. The company has little control over the supplier’s VAT behavior, yet bears the tax cost.
This scenario can lead to double exposure. The company faces higher taxable profits, while the supplier may still be assessed for unpaid VAT during an audit. Tax experts argue that expense deductibility should depend on the nature of the cost, not the VAT compliance of third parties.
Capital losses add another layer of uncertainty. Section 27 of the NTA, which explains how total profits are calculated, does not clearly state whether capital losses—outside digital or virtual assets—are deductible.
This lack of clarity matters for companies involved in restructurings, divestments, or asset sales that result in losses. Without explicit wording, companies and tax authorities may interpret the law differently. Such differences increase the likelihood of disputes and unexpected tax bills.
Many professionals believe the intention was to allow these losses. However, unclear drafting leaves room for inconsistent application that could affect reported profits and CIT outcomes.
Exporters are also watching the law closely. Section 162 lists income tax exemptions but appears to omit profits from non-petroleum exports. These profits were exempt under the old Companies Income Tax Act and appeared in earlier versions of the new law.
The omission raises an uncomfortable question. Are non-oil export profits now taxable, even when export proceeds are repatriated through official channels? For a country trying to reduce its reliance on oil, this uncertainty sends mixed signals to exporters and investors.
Finally, the new controlled foreign company rules under Section 6(2) could reshape cross-border investments. The provision allows Nigerian tax authorities to treat undistributed profits of foreign subsidiaries as if they were distributed, then tax them at 30 percent.
This means Nigerian companies could pay tax on profits they have not brought home. Unlike dividends from Nigerian companies, which enjoy franked investment income treatment, foreign dividends do not appear to receive the same relief.
The mismatch increases the effective tax rate for companies with offshore operations and complicates international business structures.
